Can shipbuilders afford strike?

Seoul - Unions at Korea’s three largest shipbuilders are threatening to strike at a time when the companies are struggling to stay afloat amid the worldwide industry slump. They are demanding a raise and improved working conditions, adding that unless their demands are met they will begin a strike on Sept. 9. However, industry analysts are chiding the unions, saying this is not the time for workers to stage a walkout when their companies are losing huge amounts of money on falling orders and unprofitable projects. They say unionized workers should refrain from making “excessive” demands and instead work together with management to overcome the current difficulties. The Coalition of Shipbuilders’ Labor Unions, which was founded in May, held a press conference Wednesday pledging to go on a strike on Sept. 9 unless shipbuilders accept their demands. Its representatives said the unions have taken the necessary steps to begin a strike, urging management to increase their base salaries by about 120,000 won ($100) a month. However, company officials are expressing concern over the unionized workers’ latest move, urging employees to join in the ongoing restructuring campaign to help revive the companies. “If the union begins a strike, it will certainly delay ship deliveries and negatively affect shipbuilders’ credibility,” said a shipbuilding industry official, who declined to be named.

“The strike will also adversely affect the firm’s efforts to secure new orders and aggravate their financial health. They should not go on strike.” According to Hyundai Heavy Industries (HHI), the world’s largest shipbuilder, its union is demanding their base salaries be increased by 127,560 won a month. “We are asking the union to accept a wage freeze this year, given the company’s dismal performance,” a company spokesman said. “We are doing everything we can to reach an agreement with unionized workers. Both management and labor must work together to tide over current difficulties. It is not the time for workers to strike.” In the second quarter, Hyundai Heavy posted a 171 billion won operating loss due to its delayed offshore plant projects. In 2014, the company posted a 3.25 trillion won operating loss, the largest in its history. The company has been suffering staggering losses from its dismal offshore plant business over the past few years. Daewoo Shipbuilding & Marine Engineering (DSME), which posted a 3.03 trillion won operating loss in the second quarter, is calling on unionized workers to do their jobs. “The company is now in deep trouble and has taken a wide range of drastic measures to prop up its deteriorating balance sheet,” a DSME spokesman said. “It is certainly not the time for the union to ask for the salary increase. They have no cause to stage a strike.”

Samsung Heavy Industries, which also lost 1.55 trillion won in the second quarter due to construction delays in several offshore plant projects, said labor and management are trying to settle this year’s collective bargaining. “We are doing the best we can to finish this year’s wage negotiations peacefully. It is too sensitive to comment on their status,” a company official said. Following their dismal performance, all three shipbuilders announced sweeping restructuring measures aimed at cutting expenses and increasing operational efficiency. They vowed to dispose of non-core assets and manage manpower more efficiently. In addition to incurring huge losses from offshore plant projects, Korean shipbuilders have been hit hard by an overall global industry slump. Falling oil prices have also slashed demand for oil tankers and other types of ships. Chinese shipbuilders in particular have caught up with Korean manufacturers, making it harder for local players to win orders abroad.

(Source: The Korea Times)